Reducing Government Spending

Baroness Kramer Excerpts

Tuesday 24th March 2026 Lords Chamber

[Lord Livermore (Lab)]

I am sure my noble friend makes a very interesting point. It is notable, though, that the party opposite’s first instinct is to cut spending at a moment of instability such as this. That is precisely the stop-go pattern of investment that got us into the problems that our economy is now in. Cutting investment at this point and returning to austerity would be the very worst thing that we could do for growth—the very definition of short-termism—yet that is precisely what previous Chancellors with previous fiscal rules have done. In the years following the financial crisis, austerity took demand out of the economy when it was needed most, undermining investment in critical infrastructure, weakening productivity and choking off growth. Unlike today’s Conservative Party, we will not repeat the mistakes of the past.

[Baroness Kramer (LD)]

My Lords, despite these volatile times, the Debt Management Office, on behalf of the Treasury, still seems determined to issue £20.4 billion in index-linked gilts this year. The cost of servicing the UK’s national debt is already far more vulnerable to rises in interest rates than comparable countries, thanks to past issuances which have meant that 25% of our national debt is index-linked. Surely it is time to rethink this strategy.

[Lord Livermore (Lab)]

The Debt Management Office’s operations continue to see strong demand, with efficient pricing. As I have said already, this year the Government will reduce the deficit by £20 billion since last year from 5.2% to 4.3% of GDP, and global financial market volatility means it is more important than ever to have a robust fiscal framework, with fiscal rules that provide stability, ensure our public services are sustainably funded and reduce the burden on future generations.